Panel members split over deficit plan

Retirement-age raise; gas-tax hike proposed in sweeping package

WASHINGTON (MarketWatch) — A revised deficit-cutting plan from a presidential commission gained some support from key panel members on Wednesday, but also came in for intense criticism two days ahead of a tough vote on the measure.

The plan, released by the National Commission on Fiscal Responsibility and Reform, would gradually raise the retirement age to 69 by 2075; recommends cuts to both Medicare and Medicaid; and suggests cutting 200,000 federal government jobs by 2020 as well as cutting defense spending. Read the commission's report.

It aims to save $4 trillion by 2020.

Members including Sens. Kent Conrad, a North Dakota Democrat who chairs the Senate Budget Committee, and New Hampshire’s Judd Gregg, the top Republican on that committee, said they would support it.

But many other members were non-committal at a public meeting Wednesday and one member of Congress said she’d reject the proposal, dubbed “The Moment of Truth.”

News Hub: Deficit Panel Unveils Controversial Plan

(3:48)

The president's bipartisan deficit reduction panel released its plan today and will take a final vote on Friday as the panel's chiefs push controversial proposals such as limiting the mortgage interest tax deduction. John McKinnon discusses.

Passage of the non-binding plan requires approval of 14 of 18 commissioners. Passage would force a debate in Congress.

Federal budget-watchers praised the report but some said it would be difficult to get 14 members to agree on the comprehensive plan.

“It reinforces that we have serious problems that we need to address and that we need to implement a plan,” said former U.S. Comptroller General David Walker.

Concord Coalition Executive Director Robert Bixby said the commission’s report was “a credible, responsible and comprehensive plan for addressing the nation’s growing debt burden, which will reach unsustainable levels if no action is taken.”

The commission’s report comes about a month after Republicans won the House of Representatives in the midterm elections. Republicans have promised to attack spending in the new session of Congress.

Rep. Jan Schakowsky, an Illinois Democrat, said she would vote “no” on the plan, calling it “unconscionable” to make Medicare beneficiaries pay more for health care.

Conrad said he would support the commission’s plan because he doesn’t see another alternative. “We are on a course that is utterly unsustainable,” he said Wednesday.

Former Republican Sen. Alan Simpson and Erskine Bowles, a Democrat who was President Bill Clinton’s chief of staff, were tapped by President Barack Obama to head the 18-member panel.

“Debt denial has gone the way of the dodo bird,” Simpson said Wednesday morning, at the opening of the meeting. The deficit hit nearly $1.3 trillion last year, the second-largest on record.

The plan, which cuts government spending more than a version released in November by Bowles and Simpson, would also cap the popular mortgage-interest deduction to loans less than $500,000, and tax capital gains and dividends at normal rates. Gasoline taxes would be gradually raised by 15 cents a gallon between 2013 and 2015.

The commission’s plan also calls for discretionary spending to return to pre-2008 levels in 2013. Spending in 2012 would be frozen at 2011 levels.

Sen. Richard Durbin, a Democrat from Illinois, said that gradually raising the retirement age was acceptable to him but like other members said he didn’t support all the proposals in the 59-page document.

Rep. Jeb Hensarling, a Texas Republican, said that he’d like to see the plan come to the House floor but didn’t indicate if he’d vote to support it on Friday.

Former Federal Reserve Vice Chair Alice Rivlin and Honeywell Inc. chief executive David Cote said they’ll vote for the plan on Friday.

The plan would also reduce the corporate tax rate to between 23% and 29% from the highest rate of 35%.

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